Transferring ISAs

There are four main reasons why an investor might need to reconsider their current selection of funds.

1. Poor performance

Some "star" funds can turn in great figures for a year or so and then fade over the medium to long term until they are at the bottom of their peer group. One key factor in a fund's performance is the actual fund manager. If they leave, it can have a major impact on the fund, particularly if they are replaced by someone of little or no recognizable experience.

2. Diversification

Many client portfolios have a large proportion held in one particular investment sector, usually in the UK. They may benefit from a transfer to reduce risk associated with having "all their eggs in one basket".

3. Consolidation

Alternatively, you may want to consolidate a wide selection of small sums of money, held with a variety of fund managers, into a few select funds to make it easier to keep track of your holdings. Your investment needs and appetite for risk will change over time. Your current ISA investment may no longer be appropriate.

4. Changing needs

Over time what you need from your investment can change. A younger investor may want an aggressive growth strategy, as you approach retirement you may want to move to a more cautious strategy. When you have retired you may well wish to generate an income from your investments to supplement any pension you receive.

Transferring

A transfer is simple and will not affect the tax-efficient status and there is no limit on the amount you transfer. If you transfer your ISA to a new account manager you will not be under any obligation to take out further ISAs with them, and you do not have to invest your ISA with the same account manager or fund as any of your current ISA investments. Transferring an ISA does not affect you current years allowance as long as the correct forms are used.

Costs involved

These will depend on the terms of your existing account manager, and the initial costs of the new provider to whom you are moving. These may include: exit charges, transfer penalties, plan closure fees or pro-rata annual management costs for leaving before the end of a half-year period.

You should check the terms and conditions of your current plan to see what, if any, charges apply. During transfer there may be a delay of up to 4 weeks between closing down your existing account and opening your new one. During this period you will not participate in any upward movements in the stock market. If you use a fund supermarket you should check with us to see if you can re-register your existing units first before completing the fund change once the new supermarket account is opened. We find this to be a more efficient way of changing funds and it reduces this out-of-the-market risk.

Making a transfer

You must complete a special ISA account transfer form (contact us for the forms).

These are usually in two parts.

One requires personal and investment details for your new account; the other is an authority asking your existing account manager to transfer the proceeds.

Simply return them to Allenbridge to obtain our special discounts. Your new account manager will arrange the transfer of the existing funds and co-ordinate the entire process.